(Analysis) Assessing the Added Value of European Engagement with Southeast Asia

Andrea Laroni
EU and ASEAN flags. Source: switchasia

Southeast Asia is located at the core of the wider Indo-Pacific region and embraces one of the globe’s most crucial bodies of water for maritime trade, the South China Sea. Being also home to vibrantly growing economies, the region holds great strategic importance for most global players. This includes the European Union (EU), who have vital interests and economic relationships and security agreements.

Since the publication of its so-called Indo-Pacific Strategy in 2021, the EU has been debating whether it can have a greater role as an external power in Southeast Asia. Here, one of the most relevant regional actors, and strategic partners of the EU, is the Association of South East Asian Nations (ASEAN), comprised by Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

As outlined by its founding declaration, ASEAN aims at promoting regional economic growth, peace and stability as well as cooperation in multiple fields through the creation of an association for regional cooperation involving 10 sovereign member countries. The outlook and aims of the organization closely resemble those of the EU which arguably was a model throughout ASEAN’s whole integration experience or, at least, when the relevance of the organization was put into question.

Therefore, in light of this mentor-mentee relationship existing between the two organizations, the EU has always been well-positioned to provide guidance to ASEAN’s institutional development and steer the regionalization process in Southeast Asia, in turn, establishing a more solid European presence in the region.

Comparing the EU and ASEAN. Source: EU-ASEAN Strategic Partnership Blue Book 2022

In this regard, the approach of the EU could be interpreted as nurturing this special relationship with ASEAN to extend the European clout in the region. As further explained below, the bloc holds a vital interest in securing economic activities as well as expanding its economic ties with fast-growing economies in the region and abroad. Furthermore, the EU is willing to play an active role in strengthening regional stability and security, not only to avoid a possible undermining of its economic interests but also to prevent the local proliferation of security phenomena that might have implications for European security. From a geopolitical perspective, since the region is expected to be the privileged arena of great power competition between the US and China, Europeans also feel the need to play a more meaningful role to retain global geopolitical relevance.

Leveraging its status and expertise as the globe’s most advanced regional organization, the core of the EU policy in the region has been to strengthen ties with ASEAN while improving the organization’s centrality in regional affairs and promoting its development according to the European model of regionalization. These objectives translated into political and functional support for further attempts of Southeast Asia to progress on the path of regionalization as well as active participation in wider, and ASEAN-centred, regional organizations, such as the Asia-Europe Meeting (ASEM) and the ASEAN Regional Forum (ARF).

The inherent character of ASEAN — exemplified by the concept of the ASEAN Way and its emphasis on consensus and non-interference in domestic affairs — prevented any substantial leaps towards deeper regionalization. Moreover, due to the lack of interests from other regional stakeholders, like China, in multilateral diplomacy and rules-based solutions to regional disputes, ASEAN has been limited in how it can regionalize institutional solutions to specific geopolitical issues. Within this void, the EU can offer unique supranational assets that are both very appealing and, in most cases, asymmetric to what the U.S. and China offer. There is room for the EU to also fit in the region as a “third-power” that can mitigate increasing pressures from the bipolarity of Sino-US competition.

Economics: Vital Interests and Strong Appeal

Regardless of the geographic distance, Southeast Asia is one of the main regions of transit and destination for EU trade. With a total trade of more than €215 billion in goods (2021) and more than €82 billion in services (2020), the EU is ASEAN’s third largest economic partner after China and the U.S. Similarly, ASEAN represents the EU’s third-largest trading partner outside of Europe.

Since 2011, overall trade with ASEAN has almost doubled in size, and, looking further into the future, the potential for economic cooperation is even greater. In this regard, ASEAN as a single economic bloc is forecasted to take the spot of the world’s fourth-largest economy by 2030. Indonesia alone is expected to rise to this position by 2050 (in purchasing power parity terms), with the region hosting other varying dynamic economies. Some examples include Vietnam and the Philippines, which are likely to experience some of the sharpest rises in the rankings and enter the realm of the 20th largest economies globally.

Shifting the focus to wider regional dynamics, the South China Sea, which is located at the core of Southeast Asia, represents a vital place of transit for EU trade reaching both Southeast and East Asia. According to the European External Action Service (EEAS), approximately 40% of EU external trade goes through the region each year. Considering that the EU’s exports of goods in 2021 amounted to approximately €2 trillion, it would mean that approximately €800 billion of EU traded goods transited the South China Sea that year. Therefore, the EU has enormous direct economic stakes in the region and as an area of maritime transit for its trade with East Asia.

Cargo ship. Source: Ian Taylor on Unsplash

On the offer side, the EU manages to be a rather attractive and competitive economic partner for the region. Two features of the EU help define its strong appeal; the provision of financial resources in the form of Foreign Direct Investment (FDI) and Official Development Assistance (ODA); and the opportunity to access the European market — which is the globe’s largest trading bloc.

In 2021, the bloc was the second largest provider of FDI after the U.S., with a total of more than $26 billion. This is approximately double the amount of FDI provided by China — with the exclusion of Hong Kong — or Japan in the same year. In certain years, the EU has been by far the largest source of FDI, whereas, in some ASEAN countries, like the Philippines, the total FDI stocks attributable to the EU made it the largest foreign investor.

The ODA is another significant source of funding for Southeast Asian countries. The EU bloc has delivered more than €28 billion in gross development assistance to ASEAN from the period of 2007-2022. Although this figure remains low compared to other regional recipients of European ODA, the EU represents a consistent development partner for ASEAN countries, with an average provision of approximately €1.75 billion each year since 2007.

The second, and arguably most significant feature of the EU’s economic appeal, is its market. Having access to the European market means being able to export and invest in all 27 Member States. These account for a collective GDP of approximately €14 trillion and a share of 14% of global trade in goods. Unlike China, the EU market enjoys competitive standards in terms of the certainty of the legal framework and the transparency of its rules, making the choice to export there a safe bet. Furthermore, the EU is famous for being a rather open economic bloc that is willing to finalize substantial trade agreements in the region. This is a feature that distinguishes Europeans from Americans, the latter being less willing to provide market access as recently demonstrated by the limited scope of the Indo-Pacific Economic Framework (IPEF).

In contrast, the EU concluded negotiations for free trade agreements with Vietnam and Singapore in 2013 and 2015, respectively. Negotiations are ongoing with Indonesia, whereas the process involving Thailand, Malaysia, and the Philippines is currently on hold. Delays notwithstanding, the EU has expressed the aspiration to resume these negotiations with the right conditions and has always been rather outspoken about its ambition to ultimately achieve a region-to-region agreement on free trade with ASEAN.

EU Free Trade Agreement and Investment Agreement Negotiations in ASEAN. Source: EU-ASEAN Strategic Partnership Blue Book 2022

Therefore, the characteristics of the EU as an economic actor, together with the importance of trade for ASEAN’s economic growth, make the EU a reliable long-term economic partner for Southeast Asia. Considering the broader geopolitical scenario, ASEAN also needs to reduce its economic dependency on China, its main trade partner since 2009, with whom ASEAN performed 18% of its trade in 2019. In the context of political tensions and potential military flash points throughout the South China Sea, and considering the precedents of China weaponizing its trade might against other countries, increasing ASEAN’s trade flows with the EU would represent an opportunity to reduce the bloc’s economic vulnerabilities.

Security: Nuanced Interests and Unique Assets

Peace and security in the region are issues of primary concern for the EU. This is not only due to the EU’s economic interests, given the need to preserve safe lines of maritime transport for approximately 40% of its external trade, but also to a direct interest in regional security per-se. In a globalized world, allowing the proliferation of a situation of insecurity in one region is likely to have external implications or spill over to others. This is particularly true for non-traditional security threats such as international terrorism, transnational organized crime, or mass migration, which are issues that go beyond the dimension of conventional conflicts and are transnational by definition.

Along these lines, the 2021 EU Indo-Pacific Strategy emphasized the need to intensify cooperation with ASEAN on transnational security issues such as counter-terrorism (CT), cybersecurity, non-proliferation, or maritime security. Although this strategy was developed before the war in Ukraine, it remains a relevant compass to direct the EU’s engagement with the region. In these circumstances, the EU will likely need to downsize its initial commitment to project military power in the Indo-Pacific, a rather problematic policy from the beginning. On the positive side, the bloc now has the opportunity to rethink its security approach, prioritizing non-traditional security capabilities over military deployments. This would also rely on the true strengths of Europeans that, since the end of the Cold War, had to deal with a range of non-traditional security threats and developed their capabilities accordingly. Among these threats, international terrorism represents an appropriate case study for the analysis of the EU’s unique and asymmetric non-traditional security offer to Southeast Asia. Furthermore, terrorism is an even more current concern in Southeast Asia, where episodes of this kind peaked in 2019.

In the field of CT, the EU is a valuable repository of best practices and expertise on how to tackle the phenomenon on a transnational level. Over time, it has built supranational tools and procedures to support a collective effort to fight terrorism. Given the similarities in the outlook of the two organizations, this portfolio represents a tailor-made offer hardly obtainable for ASEAN elsewhere.

Joint security at the EU level. Source: OPTIV

In terms of actors, the EU Agency for Criminal Justice Cooperation (Eurojust) and the EU Agency for Law Enforcement Cooperation (Europol) are the two most relevant CT players at the European level. Eurojust is tasked with assisting EU member states with joint investigations, prosecutions, and broader judicial cooperation. Therefore, it facilitates the prosecution of terrorism cases throughout multiple and diverse national jurisdictions. The agency also handles a European Judicial Counter-Terrorism Register, which collects data about proceedings at the member state level and helps to create connections among judicial cases throughout Europe. On the other hand, Europol functions more at the operational level and hosts a unit dedicated to CT, the European Counter Terrorism Centre. The agency acts as a platform for exchanging information and cooperating on cross-border operations as well as a support role by providing CT expertise, crisis response support, operational deployments, and analytical support.

The EU has also developed large-scale systems and procedures to bring together IT instruments, member states, and CT supranational players. The Schengen Information System II (SIS II) is one example. This database allows national law enforcement authorities to swiftly access and exchange a variety of CT-related information concerning people, ranging from identity misuse, people involved in serious crimes to people banned from the Schengen area, and objects like stolen vehicles or firearms. Furthermore, the EU Commission emphasized how these elements are now part of a cohesive procedure since member states “are obliged to create a SIS alert for all cases related to terrorist offenses… Member States will also have to inform Europol of hits alerts linked to terrorism, which will help to connect the dots at the European level.”

Partners to Be?

Given the asymmetry of its assets compared to security offers in the region, the EU has the potential to play a key role with a strong focus on non-traditional security, an area that has been largely disregarded by other foreign security providers. Additionally, it can count on its mentor-mentee relationship with ASEAN for which the EU is a natural repository of expertise about regionalization and joint action in the field of economics and security. Its perception as a neutral power in purely military terms is another significant asset that facilitates the involvement of the EU in regional affairs.

Therefore, the EU’s active engagement with Southeast Asia should be very welcomed by regional countries as it provides the region and its countries with the capacity to address gaps in regional security and economics. More importantly, a committed European presence should be perceived by ASEAN countries as an opportunity to better position themselves within the growing Sino-US rivalry for regional hegemony as well as a balancing factor to renew the stability in the region.

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(Analysis) Assessing the …

by Andrea Laroni time to read: 9 min